The Dayton and Indianapolis units of AES look at coal shutdowns

The Dayton Power and Light (DP&L) unit of AES Corp. (NYSE: AES), along with co-owner Duke Energy (NYSE: DUK), plans to deactivate the coal-fired, 414-MW Beckjord Unit 6 in April 2015.

“On July 15, 2011, Duke Energy, co-owner with DP&L at the Beckjord Unit 6 facility, a 414 MW power plant, filed their Long-term Forecast Report with the Public Utilities Commission of Ohio (‘PUCO’),” said the May 4 Form 10-Q filing of AES. “The report indicated that Duke Energy plans to cease production at the Beckjord Station, including the jointly-owned Unit 6, in December 2014. This was followed by a notification by Duke Energy to PJM, dated February 1, 2012, of a planned April 1, 2015 deactivation of this unit. DP&L is considering options for its Hutchings Station, a six unit power plant with 365 MW of total capacity, to comply with the Utility MACT standards.”

Environmental regulations, including the Utility Maximum Achievable Control Technology (MACT) rule, make it likely that the Indianapolis Power & Light (IPL) unit of AES could retire several of its existing, primarily coal-fired, smaller and older units within the next several years, the Form 10-Q added. These units are not equipped with the advanced environmental control technologies needed to comply with existing and expected regulations, and collectively make up less than 15% of IPL’s net electricity generation over the past five years. IPL is continuing to evaluate options for replacing this generation. IPL is currently reviewing the impact of the new Utility MACT rule and estimates total additional expenditures for IPL related to this rule to be $500m to $900m through approximately 2016.

IPL laid out air plan in recent Indiana case

IPL got its latest environmental plan approval on March 28 from the Indiana Utility Regulatory Commission (IURC). Within that case, IPL said that it is pursuing a number of options to meet the new Cross-State Air Pollution Rule (CSAPR) SO2 requirements. Among other things, IPL previously upgraded the emission reduction capability of the Petersburg Unit 3 flue gas desulfurization (FGD) equipment, commenced operation of the new FGD on Harding Street Unit 7 and completed and placed into operation the Petersburg Unit 4 FGD upgrade. The purpose of the Unit 4 FGD upgrade is to increase the SO2 removal efficiency of the unit to 95%, which will result in an estimated additional removal of 14,000 tons per year of SO2.

With the successful upgrade of the Petersburg Units 3 and 4 FGDs, the Harding Street Unit 7 FGD installations, and the operation of Petersburg Units 1 and 2 FGDs, IPL projected that it will materially meet the new SO2 emission reduction requirements. However, as it has done in the past, IPL may need to supplement its compliance with the purchase of allowances on the open market.

Also, from 2009 through the end of 2011, IPL completed much of the work for the Petersburg Units 2 and 3 selective catalytic reduction (SCR) systems. The next scheduled outages for these units are in the spring of 2012 and the fall of 2012, respectively. Most of the remaining tasks cannot be performed while the equipment is in operating mode. For this reason, only Unit 2 activities are planned for the next six month period relating to the SCR reactors, the IURC approval order said.

A primary shutdown candidate for IPL is the four-unit, 263-MW Eagle Valley coal plant. The five largest, most efficient and therefore safest from shutdown units are the four coal units at Petersburg and Harding Street Unit 7.

DP&L’s Hutchings plant may switch to gas

DP&L’s smallest station is Hutchings, a 365-MW plant that receives coal by truck or rail. The plant has not been retrofitted with scrubbers and there are no plans for them, said a recent fuel audit of DP&L that was commissioned by the PUCO from consultant Energy Ventures Analysis. The plant operates at very low levels due to its high cost. Hutchings has burned less than 100,000 tons per year in the last three years. DP&L is considering several options for Hutchings, including retirement and the conversion of two or more of the units to natural gas, with an existing gas pipeline having the capacity to supply gas to two units, the audit noted.

Duke Energy Ohio, in an annual environmental compliance plan that was filed April 16 at the PUCO, said that due to the Mercury and Air Toxics Standards (MATS), also known as the Utility MACT, which have an initial compliance deadline of April 2015, the primary impact is that it may force the retirement of the units at the Beckjord power plant. Duke Energy’s Feb. 28 Form 10-K report shows Beckjord with 1,124 MW of total coal-fired capacity, with 862 MW controlled by Duke.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.